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A personal loan is money you borrow and can use for various purposes. Typically, the borrower has a fixed schedule to repay the loan. Depending on the lender, you can borrow as little as $1,000 or up to $100,000, sometimes even more. What is unique about applying for a personal loan is the flexibility to decide how you want to use the money.
Where to apply for a personal loan
Traditionally, you apply for a personal loan to a bank or a credit union. However, these financial institutions are stricter in their approval process. Instead of these options, there are non-traditional lenders that also offer loans. For a more convenient application, you can apply via an online referral service.
Life loans reviews for this popular referral service state that applying via this platform connects the applicant to a marketplace of online lenders. This process increases your chances of getting approved regardless of if you have good or bad credit.
Best uses for a personal loan
Since personal loans are versatile, it is easy to understand why many people apply. However, every financial product comes with obligations. It is essential to make sure that when you apply for a personal loan, there is a real need for the money. Here are instances when taking out a loan makes the most sense financially:
- Consolidating debt with high interest. Perhaps considered as the best use for a personal loan, consolidating high-interest debt makes repayment more affordable. Examples include credit card debt and other consumer loans. Consolidation also has the added advantage of making repayment more convenient because you are only indebted to one lender.
- Home improvements. Home renovations and upgrades can be quite costly. If you want to increase the value of your property, you can apply for a personal loan and use the proceeds for home improvements. This option is safer than a second mortgage on your property which poses more financial risk, especially if you plan to sell your house eventually.
- Pay for a big life event such as a wedding. Borrowing money to pay for a wedding makes sense instead of using your credit card to pay for large expenses. Credit cards charge a high-interest rate which could cause your debt to balloon if you cannot pay the balance in full within one month.
- Pay for emergency medical bills. When you or a loved one has to undergo an emergency medical procedure, a personal loan could help cover the expenses excluded by your insurance. Once again, compared to a credit card, you are likely going to pay less interest by borrowing cash.
There are many other sensible uses for a personal loan you can consider, such as refinancing a student loan or paying overdue taxes. It is critical to assess your current financial situation first to ensure that when you do apply for a loan, you are doing so to improve your situation and not put yourself in further debt. Moreover, make sure that you can fulfil the repayment schedule to avoid getting charged penalties and additional fees.
